Things To Consider When Preparing Your Settlement Agreement

In Break-ups & Partnership Disputes, Business Tips, Business Transactions, Dispute Resolution, Litigation & Lawsuits by Alicia McConnellLeave a Comment

So you finally found a way to settle that legal dispute you had – congratulations! You’re almost there, now you just need to define the terms of the agreement you reached. Don’t overlook this part of the process – a settlement agreement that fails to adequately describe the parties’ intentions and obligations can lead to additional disputes between the parties, rather than the final resolution you seek. The following are some things to consider to help ensure that the settlement process goes smoothly.

  • Put your settlement agreement in writing. A settlement agreement is simply a type of contract, so it should go without saying that it needs to be in writing. Do not depend upon the parties’ recollections of what has been negotiated or their own subjective understandings of the terms. Having everything outlined in a written agreement is always the best practice in any settlement agreement or other contract.
  • Make sure your agreement correctly names the parties and that the individuals signing it have the authority to do so (and to bind an entity if it is being signed on behalf of one). You don’t want the other party claiming that the agreement is unenforceable based on a misnamed party or a signature from someone who is not authorized to execute the agreement.
  • Make sure all of the parties’ obligations are clearly outlined. For example, if payments are to be made or actions performed, the agreement should specify by whom, how, and when. It is insufficient to simply state that “A shall pay $30,000 to B” without including the details – make sure to spell out how the payments must be made. This can include things such as whether payment must be made by certified funds/wire transfer, where it is to be delivered, to whom the check needs to be made, and when payment is due. If the agreement requires dismissal of a pending court case upon full payment, state the deadline for a party to dismiss that case once full payment is made. Also, most settlement agreements include a release of claims. If that is the case, your agreement should make clear what type, and the extent of, any claims from which the parties intend to release and discharge one another. Without these details, your agreement will be more difficult to enforce.
  • State what will happen if a party fails to fulfill his or her obligations under the agreement. Identify the process that must be followed in the event of a breach of the agreement, which state’s law applies, and in which court must any action to enforce the agreement be brought. You may also want to include a provision entitling the prevailing party to his or her attorney’s fees and costs spent to enforce the agreement.
  • Specify what will happen if something unforeseen should happen to one of the parties to the agreement. This could consist of terms specifying what should occur if one of the parties to the agreement passes away before the agreement if fully performed or is otherwise unable to fulfill the agreement (such as who would become responsible for any obligations or would receive the benefits of the agreement).
  • Some other terms you may want to consider incorporating include: whether the parties are required to sign the same copy of the agreement, whether original signatures are required (or whether electronic signatures and/or emailed copies are acceptable), and whether the parties are permitted to assign their interests or obligations to someone else.

These are just some of the many possible provisions that you may want to include in a settlement agreement. The specific terms will necessarily vary according to your particular agreement, and consulting with an attorney to review any proposed settlement agreement is always the safest way to ensure that the settlement process goes smoothly.

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